Trading – The Ultimate Democracy?

IT HAS been a tumultuous week for the UK, culminating in the dismal display of the England football team.

So, the British people have spoken and Brexit has been chosen.

None of us should really be surprised by what happened in the markets following such a decision.

When the early rumour was that ‘Remain’ would win, the Pound soared and when it became clear that ‘Leave’ actually did win, Sterling then fell.

We need to remember that city traders cannot trade when the ‘buy’ and ‘sell’ prices are stable, they rely on market movements to make money; so whether we were staying in or leaving, the markets were always going to move and traders would trade.

Although sterling has lost five to ten per cent of its value, this is good news for our exporters in the short term.

They will get more pounds for the stock they sell now and, as sterling recovers (remember those traders), the extra pounds they make will make any raw material imports cheaper, too.

Which brings me on to the next major trading opportunity. Now the British people have expressed their will, the politicians in Brussels are starting to flex their muscles about how the UK needs to hurry up and invoke Article 50 (which formally declares our intention to leave) and that the UK will not get a good deal to trade within the single market when we leave.

Politicians simply do not understand the true nature of how trading is the ultimate democracy.

As a nation, we import more goods and services from the EU, than we export. Most of those goods and services come from the major EU countries, Germany, France and Italy.

In the next two years, both France and Germany have general elections. Does anyone seriously thing that both German and French politicians are going to say "Vote for me and lose your job to keep Britain out of the single market"?

A deal will be reached because trade (i.e. jobs) is more important than ‘political righteousness’.  

So here is my prediction for you. Theresa May becomes Prime Minister.

The EU comes back with a proposition which allows each member state to introduce immigration controls, if they so choose.

As this is a treaty change, a second referendum is announced. ‘Remain’ win and we get to a compromise where trade continues and immigration is managed.

It is too early to see what impact the short term volatility of the markets will have on Rotherham businesses; however I think the longer term business outlook for the town is still very bright...let’s all keep trading!